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Market blog: FTSE falls as Greece calls another election
European markets fell as President Karolos Papoulias of Greece ordered a new election to break the country's political deadlock.
17.00: The FTSE 100 closed 0.51%, or 28 points, to 5,438 and the Mid-250 index gave up 0.84%, or 91 points, to 10,723, writes Caelainn Barr.
Stock markets across Europe reversed their early day gains: Germany’s DAX index lost 0.79% to 6,401, France's CAC 40 index fell 0.61% to 3,039, and the FTSEurofirst 300 index of top European shares trimmed 0.73% to 997.
After initial nervousness Wall Street bucked the trend, preferring to focus on new broadly positive consumer and manufacturing data. The Dow Jones Industrial Average traded 37 points higher at 12,732.
Earlier in Europe a fragile rally, encouraged by strong German gross domestic product figures, had tried to make up for yesterday's big fall but was soon wiped out by news that Greece must hold a fresh election to break the political deadlock over the country's future in Europe.
Fears of what a Greek exit from the eurozone would mean for its neighbours pushed the yields on their sovereign bonds above 6%. This is significant as the bond yields indicate the interest rate such countries would have to pay on new loans. Yields above this level have forced other countries to seek a bailout.
Benchmark 10-year Italian bonds added 17 basis points to 6.02% and the yield on benchmark 10-year Spanish notes widened 12 basis points to 6.35%.
French 10-year bonds took on eight basis points to 2.90% as the country’s economy failed to grow in the first quarter of 2012.
In the UK cruise-ship operator Carnival (CCL.L) added 67p, or 3.4%, to £20.34 to rise to the top of the FTSE 100 index.
International Consolidated Airline Group (ICAG.L) remained firmly at the bottom of the FTSE 100 index as it gave up 9.5p, or 6%, to 150p following a downgrade by JP Morgan.
Similarly, mining group Kazakhmys (KAZ.L) shed 30p, or 4%, to 707p as UBS reduced its target price from 900p to 720p.
See the FTSE’s performance and the index’s top risers and fallers.
15.50: Markets continue to flounder after President Karolos Papoulias of Greece said a new election would be held after the country’s political leaders failed for a third day to secure a coalition, writes Gavin Lumsden.
It is nine days since Greece’s inconclusive election result and the prospect of another election – probably next month – will add to the uncertainty over the country’s attitude to Europe’s austerity package and its place in the Eurozone.
The news offset encouraging US economic data. Although retail sales rose just 0.1% in April, slightly less than expected, the underlying trend was positive. Meanwhile, a report on manufacturing in New York state was much better than expected.
The Dow Jones rose 27 points to 12,724 and the S&P 500 added 4 points to 1,342 in early trading.
The UK’s FTSE 100 traded 15 points lower at 5,449.
Gold continued to lose its shine as a safe haven, falling 0.7% to a four month low of $1,556.68
Jamie Dimon, the embattled chief executive of JP Morgan Chase & Co, endured a barrage of criticism over the bank’s $2 billion trading losses at its annual general meeting in Tampa, Florida. Some shareholders called on Dimon to relinquish his role as chairman and for the bank to appoint an independent, non executive in his place.
13.10: Germany has been one of the world’s best stock markets this year.
On the back of Germany’s better-than-expected GDP figures this morning we looked at the performance of the DAX from the start of the year to the end of last week. The index gained 10.5% in euro terms and 6.4% in sterling terms, outpacing the US rally (8.4% and 4.7% respectively), which has received so much attention, and way ahead of the FTSE 100 which was up just 1.7%.
France’s new president Francois Hollande is due to meet Germany’s chancellor Angela Merkel this evening. Markets are waiting to see if he can convince her to relax the austerity regime which is cramping growth everywhere in Europe apart from Germany.
The FTSE 100’s limited rally has petered out with the index six points down at 5,460.
Let’s catch up with some stock news.
Spirax Sarco (SPX.L) fell 8% to £19.83 as shares in the maker of steam traps and boiler control systems, warned that the strength of the pound could dent full year sales by 3%. The stock had risen 15% year to date, so there looks to be some profit taking in rocky markets.
Renishaw (RSW.L) raced over 12% higher to £15.04 as the precision engineer forecast a higher full-year profit despite recording a fall in third quarter earnings. Analysts at Numis upgraded Renishaw to ‘hold’ from ‘reduce’. The shares have risen by a third since the start of the year and were recently bought by Citywire Money columnist David Kempton. Philip Matthews, manager of Jupiter Growth & Income , a Citywire Selection star pick, recently took profits.
Defence contractor Babcock International (BAB.L) advanced 6% to 846.5p as chief executive Peter Rogers said the firm was benefiting from the government outsourcing more work to the private sector. Pre-tax profits rose 26% to £274 million in the year to March, on revenue up 14% to just over £3 billion. Babcock is a top 10 holding of the Invesco Perpetual UK Smaller investment trust.
Outsourcing rival Serco (SRP.L) shed 3.1% to 522,75p investors took profits after a near 14% rise since the new year. In a trading update the company releases said it was confident of meeting 2012 targets.
Chariot Oil & Gas (CHARC.L) revived 11.5% to 82.6p, recovering a quarter of yesterday’s losses caused by disappointing drilling news, after chairman Adonis Pourooulis bought 100,000 shares at 74.95p, taking his stake to 10.75%.
08.55 European markets rallied on Tuesday morning following news that Germany, the powerhouse of the eurozone, avoided a recession in the first quarter of 2012, writes Caelainn Barr.
Britain’s FTSE 100 index added 0.49%, or 27 points, to 5,493 and the Mid-250 index took on 0.56%, or 60 points, to 10,874. See the FTSE’s performance and the index’s top risers and fallers.
The German economy beat analysts' forecasts of 0.1% growth, expanding 0.5% in the first quarter, avoiding a recession after growth contracted in the last quarter of 2011.
However, overnight Moody’s downgraded 26 Italian banks with a negative outlook, citing recession and rising bad debts.
Shavaz Dhalla, financial trader at Spreadex, said: ‘Bears seem to be resisting any substantial gains as traders brace themselves for a possible double-dip recession as preliminary GDP figures from the erozone are due later this morning.
‘However, any early gains in European trading could be extinguished later today as retail sales from the US are due. Economists are expecting a slowdown in sales and the weakest advance in four months.’
European stock markets also rallied to recover lost ground: Germany’s DAX index rose 0.45% to 6,481, France's CAC 40 index was up 0.75% to 3,082, and the FTSEurofirst 300 index of top European shares ticked ahead 0.56% to 1,009.
Security company G4S (GFS.L) rose to the top of the FTSE 100 index, up 8.3p, or 3.1%, to 275p as revenues grew 7.5% in the first quarter of 2012. A further boost to growth is expected from the London Olympics this year.
Citywire Top Stock Afren (AFR.L) took on 3.3p, or 2.7%, to 124p as its first-quarter production met expectations by rising to over times higher than a year ago. The group reports that it is on track to produce 46,000 barrels of oil equivalent a day by the end of the year.
British Airways owner, International Consolidated Airlines Group (ICAG.L), slipped 1.6p, or 1%, to 158p, as analysts at JP Morgan cut their rating from ‘overweight’ to ‘neutral’.
3.13 Wall Street declined on Monday, sending the Dow Jones Industrial Average to the lowest level since January, as Greece struggled to form a new government amid growing speculation the nation may exit from the single-currency euro.
The Dow Jones dropped 125 points, or 0.98%, to close at 12,695. The Standard & Poor's 500 Index lost 15 points, or 1.11%, to 1,338. The Nasdaq Composite Index fell 31 points, or 1% percent, to 2,903.
According to the reports, Greek president will continue talks on forming a coalition government, although Socialist leader Evangelos Venizelos said on Monday he was not optimistic that a government could be formed.
Adding to the political upheaval in Europe, German Chancellor Angela Merkel's Christian Democrats suffered a crushing defeat on Sunday, which could encourage the opposition to intensify attacks on her austerity policies.
Meanwhile, China's move on Saturday to cut the bank reserve ratio, normally seen as a pro-growth move, suggested the country may be facing more significant hurdles.
Financial and energy stocks were the day’s biggest decliners. JP Morgan lost 3.2% as the bank announced the exit of a top executive after suffering trading losses that could reach $3 billion or more. Bank of America fell 2.7%.
In the energy sector, Exxon Mobil Corp lost 1.2%. InterOil shed 6.7% after the company said it received a letter of intent from the government of Papua New Guinea to scrap a planned liquefied natural-gas project agreement.
On the positive side, Groupon Inc’s shot up 13.5% in extended trading after the daily deal company posted its first quarterly profit. Yahoo gained 2% after the company said chief executive Scott Thompson will resign in the wake of controversy over his academic records. Chesapeake Energy climbed 4.8% after a reported the natural-gas company expects activist investor Carl Icahn to disclose soon that he has taken a significant stake in the company.
In deal news, Avon Products added 3.8% after the company said on Sunday it would consider Coty Inc’s $10.7 billion takeover bid.
In Asia, equities declined amid Greek worries and Moody’s Investors Service downgraded Italian banks ahead of a report that may show Europe’s economy contracted.
The MSCI Asia Pacific Index fell 1% to 117 as of 11:01 a.m. in Tokyo. Japan’s Nikkei 225 Stock Average shed 1.3% and Australia’s S&P/ASX 200 Index slid 1%. South Korea’s Kospi Index retreated 1.5%. Hong Kong’s Hang Seng Index fell 0.3% and China’s Shanghai Composite Index declined 0.7%.
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
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- G4S PLC (GFS.L)
- International Consolidated Airlines Group SA (ICAG.L)
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- Spirax Sarco Engineering PLC (SPX.L)
- Renishaw PLC (RSW.L)
- Babcock International Group PLC (BAB.L)
- Serco Group PLC (SRP.L)
- Chariot Oil and Gas Ltd (CHARC.L)
- Carnival PLC (CCL.L)
- Kazakhmys PLC (KAZ.L)
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